Tag: AQA

If the depreciation charge on vehicles for the current year is accounted for by debiting the profit and loss account and crediting the provision for depreciation of vehicles account, then, after the above entries have been made, the balance on the provision for depreciation of vehicles account is . . .

Select ONE answer:

1. transferred to the vehicles account.
2. listed in the trial balance.
3. deducted from the cost/valuation of vehicles in the balance sheet.
4. transferred to the profit and loss account.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not Correct
2. The balance brought down on all ledger accounts is initially listed in the trial balance. The balances so listed are then used to prepare a profit and loss account and a balance sheet. The balance listed in the trial balance for any given provision for depreciation account will be deducted from the cost/valuation of the related fixed asset in the balance sheet — but this is after the trial balance has been prepared.
3. Not Correct
4. Not Correct

 

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Any balance brought down on a provision for depreciation account . . .

Select ONE answer:

1. should be included in the trial balance as a debit balance.
2. should be included in the trial balance as a credit balance.
3. should sometimes be included in the trial balance as a debit balance and sometimes as a credit balance.
4. should not be included in the trial balance at all.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not Correct
2. The cost of any particular category of fixed asset is shown in the trial balance as a debit balance. In order that the net book value of these assets be shown in the balance sheet. as a debit, the total depreciation charged to date on that particular category of fixed assets must be netted off against the balance on the related fixed asset account. Therefore, the balance brought down on any provision for depreciation account must be a credit balance. All ledger account balances, whether debit or credit, should be included in the trial balance.
3. Not Correct
4. Not Correct

 

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If there is a separate provision for depreciation account in the nominal (general) ledger for each category of fixed asset, the double-entry to record the depreciation charge on machinery for the current year is:

Select ONE answer:

Account to Debit        Account to Credit

1. Profit and loss                Provision for depreciation of machinery
2. Machinery                      Profit and loss
3. Profit and loss                Machinery
4. None of the above.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. The result has to be to reduce net profit (requiring a debit entry in the profit and loss account) and to reduce the book value of machinery (requiring a credit entry in the provision for depreciation of machinery account).
2. Not Correct
3. Not Correct
4. Not Correct

 

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following information relates to one of several fixed assets acquired by a firm on 1 January 1996.

• Cost £ 29,800
• Estimated scrap value £ 5,000
• Estimated useful economic life 8 years

If all of the firm’s fixed assets are depreciated at the rate of 20% per annum, using the reducing balance method, the total depreciation charged on the above asset up to 31 December 2003 will be:

Select ONE answer:

1. £4,960
2. £15,960
3. £24,800
4. £29,800

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not Correct
2. Not Correct
3. 1 January 1996 to 31 December 2003 = 8 years = the estimated useful life of the asset. The total depreciation to be charged over the estimated useful life of any fixed asset (irrespective of depreciation method used) = Cost – Estimated scrap value = £29,800 – £5,000 = £24,800. Therefore, the total depreciation charged on this asset up to 31 December 2003 is £24,800. You will get the same answer if you work out the depreciation year by year.
4. Not Correct

 

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A firm depreciates its productive plant and equipment at the rate of 10% per annum, using the reducing balance method. It is the firm’s policy to charge a full year’s depreciation on fixed assets in the year in which they are acquired.

Given the above, what is the depreciation charge, to the nearest pound, to be shown in the 1995 accounts in relation to an item of plant, with no residual value, acquired in 1991 for £10,000?

Select ONE answer:

1. £591
2. £656
3. £729
4. £1,000

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not Correct
2. Cost in 1991 £ 10,000 . NBV at 31 December 1994 NBV £6,561 – 1995 depreciation charge = 10% of NBV £656
3. Not Correct
4. Not Correct

 

This work is licensed under a Creative Commons Attribution 4.0 International License.